With new car prices reaching all-time highs, the allure of a late-model used car can be rather tempting. But how do you know what you’re getting? Sure, you might save a few thousand dollars on the deal, but will you end up paying it all back in car repairs?
This scenario has long been a sticking point for used car buyers. But there is a solution that can bring you peace of mind and still save you money in the long run. It’s called a certified car, and you can buy one from just about any dealer who also sells new cars.
Continue reading for answers to common questions about certified pre-owned (CPO) cars and whether they are a good option for you.
What Does Certified Pre-Owned Mean?
A CPO car is a previously owned vehicle, usually less than 5 years old and with less than 60,000 miles, though some manufacturers will accept cars with more miles on the odometer. (The age and mileage warranties vary by manufacturer.)
The original manufacturer backs CPO cars. A vehicle’s CPO designation comes after passing a detailed, multi-point inspection. They come with an extended warranty from the original date of service, good at any dealer in the country.
If you see a car that is “dealer certified,” just know that the car does not offer the backing of the manufacturer certification to make it a CPO car. Dealer certification standards vary by dealer and a car still goes through an inspection process.
Certified Pre-Owned vs. Used Cars
A CPO car comes with a complete inspection. Replacement or repairs for any worn parts or damage occur before selling the vehicle. When buying a used car, the buyer must pay for an inspection and any subsequent repairs to get this same service.
A CPO car includes an extended warranty, a limited bumper-to-bumper warranty, and other services, such as 24-hour roadside assistance. A used car usually has the remainder of the factory warranty and only if it’s still in effect and fully transferable.
How Does a Car Qualify for Certification?
When the dealer acquires a used car through trade-in or lease return, they will put that vehicle through a rigorous inspection program administered by a factory-certified mechanic.
If the car, truck, or SUV meets the manufacturer’s criteria, dealers can sell it as a CPO vehicle. The fundamental factors for a potential CPO car are that it must be in excellent condition, and be mechanically and cosmetically sound. It can also offer low mileage.
If it doesn’t meet the CPO program requirements, dealers can fix the car’s problems, or the vehicle may face rejection from the program. Each automaker uses a different set of criteria. Still, the bottom line is that CPO vehicles will be the highest quality used cars.
Who Certifies the Cars?
A CPO car gets certified by the dealer and follows the manufacturer’s specifications and requirements. The dealer performs the inspection and makes necessary repairs, but the automaker fully backs the vehicle as if it were selling a new car.
What is the Difference Between a CPO Car and an Extended Warranty?
Every car comes with a manufacturer’s warranty. Manufacturers usually offer an extended warranty when the car is purchased new, but it’s up to the buyer to purchase the additional coverage for the vehicle. It continues the factory warranty for specific parts and may include a higher deductible as the vehicle ages. It may or may not be fully transferable.
A CPO car extends the factory warranty and offers numerous perks. Benefits might include:
- Loaner cars
- Roadside assistance
- Rental car reimbursement
- Basic maintenance such as oil changes
What is the Difference Between a Certified Car and a Service Contract?
A service contract is a coverage agreement initiated by an independent underwriter, not a manufacturer. Some states require insurance companies to underwrite service contracts, making it easier to verify their validity. Advertisements sometimes call these contracts “certified,” but the agreement is fundamentally different.
There are numerous options with a service contract covering mileage and age and who must perform the repairs. In many instances, a service contract requires the buyer to foot the bill for repairs up front and then seek reimbursement.
Consumers must address reimbursement disputes with the contract administrator, not the dealer that performs the work. You also run the risk of the contract underwriter going out of business.
Closure can nullify the pre-paid contract, although the dealer may still be required to honor the contract as laws covering these services vary by state. Remember, a service contract is essentially just break-down insurance, and the automaker does not back these programs. Some of these contracts only cover moving parts or major mechanical components.
You are usually not required to get a service contract to obtain financing, so beware of any dealer that tells you otherwise. Some service contracts do not take effect until the manufacturer’s warranty has expired and may come with very high deductibles, so be sure to read the fine print.
Related Stories on Certified Pre-Owned and Used Cars:
- Best Certified Pre-Owned Programs
- Certified Pre-Owned Cars Are In Record Demand, Too
- How to Buy a Used Car
Editor’s Note: This article has been updated to reflect changes in certified pre-owned programs.